Welcome to Part 2 of our Auction Guide. The following is our advice on what happens on Auction day and what buyers must do to make sure they are ready to bid with confidence during the auction.
How to Buy at Auction
To buy a property at Auction you must bid. There’s no other way around it!
If your bid is the highest bid taken by the Auctioneer and is above the Vendor’s reserve price you will purchase the property.
If your bid is the highest bid taken by the Auctioneer but hasn’t reached the vendor’s reserve price, then the property will be passed in.
You, as the highest bidder, will have the first opportunity to buy the property at the vendor’s reserve price. The auctioneer may or may not announce that the property is on the market and is going to be sold. The best policy is to ensure you are the highest bidder if you want to buy the property.
If the property is passed in on a vendor bid then the vendor via the vendor’s agent is at liberty to discuss the purchase of the property with any genuine buyers.
Remember, if you want to buy a property at auction you MUST bid.
The highest bidder will either buy the property or get the first opportunity to purchase the property at the vendor’s reserve price.
Registering to Bid at the Auction
In order to bid at the Auction, you are required to register to bid. No bids will be accepted from any bidder who has not registered.
Who needs to Register?
If you are bidding to buy jointly with a spouse or partner only one of you needs to register.
You need to register if you are bidding for another person or a company and you need to show the agent a letter of authority from them authorising you to bid on their behalf. This also applies if you are bidding on behalf of someone on the telephone. We have some forms available to assist with these types of registrations, so just ask your agent.
If you are bidding for a company the letter of authority must be on company letterhead and the ABN will be recorded as the company’s proof of identity.
Proof of Identity
To register, you must present a card or document issued by a government or financial institution, that shows your name and address, for example:
Driver’s licence or learner’s permit (this is the most common form of ID used)
Vehicle registration paper
Council rates notice
If you do not have this kind of proof of identity, you can use two documents that together show your name and address. Documents showing your name can include passport, Medicare card, ATM or credit card and Birth Certificate. Show one of these with one of the following that confirms your address, eg utilities bill, real estate rental agreement or statutory declaration stating your address.
When to Register
You can register with us at any time prior to the Auction. Most people register on the day itself at the Auction or you can pre-register beforehand.
If you pre-register, you will still need to show the agent your proof of identity on Auction day. The agent will then give you your bidder’s number.
What Happens at Registration
When we register you, we will write your name, address and the number of your proof of identity in the Bidder’s Record and, if you are bidding for someone else or a company, their name address and proof of identity details.
We will then give you a bidder number which you must hold up and show the Auctioneer each time you make a bid.
What if I Arrive at the Auction Late?
If you arrive after the Auction has started and wish to bid you will need to quickly register or present your proof of identity if you have pre-registered.
As soon as you have a bidder’s number, the auctioneer can accept your bids.
Paying the Deposit
If you are the successful bidder, you are required to pay the deposit when signing the Contract for Sale. Usually the deposit amount is 10% of the purchase price and you will be required to pay this amount unless you have negotiated something different via your Solicitor prior to the Auction.
It is very important to have how you will pay the deposit worked out before Auction day, particularly if the auction is on a Saturday, as the deposit is immediately payable after the fall of the hammer and when signing the Contract for Sale.
There are a number of options when it comes to paying the deposit:
This has always been one of the most common ways to pay a deposit at Auction. You are able to pay the deposit with a personal cheque and will be issued with a receipt for same.
If you do not have access to personal cheques you are able to pay by Bank Cheque, but we would recommend that you make an agreement with the Vendor, via the Solicitors, to accept a fixed amount which is based upon the quoted price of the property, ie if $500,000 then $50,000. It is likely that the Solicitors will write a Special Condition relating to this to be inserted into the Contract if you are the successful bidder.
Electronic Funds Transfer
This method of paying the deposit is quickly becoming the most common way of paying the deposit.
The most important thing, when planning to pay your deposit by EFT, is to be aware of your daily limits on your internet banking which are often only around $5,000 and will not allow you to pay 10% as required.
It is possible to increase your daily limit for a one-off transaction and we suggest you arrange this with your bank in the days leading up to the Auction.
Once you have completed the transfer of the deposit to our Trust Account, we will need to see a receipt of the transaction. The preferred way of doing this is for you to email it to the agent at the time of doing the transaction. Sometimes your internet banking will give you an option to email the receipt otherwise you can screen shot it and then text or email it to the agent.
We will have our Trust Account and email details available for you on the day. We will issue you with a receipt when the funds are received in our Trust Account.
Please note that if you negotiate a lesser deposit, eg 5%, through your Solicitor prior to the Auction it is important to clarify whether you are only paying a 5% deposit in total and a Special Condition is written to this effect or whether your 5% deposit is deemed to be a part payment only of the full 10% deposit. If the latter is the case, then you are liable for the balance of deposit up to 10% in the event that you do not complete the Contract for some reason.
Signing the Contract for Sale
Once you are the successful bidder you will be required to sign the Contract for Sale which are then exchanged by the auctioneer. There is no cooling off period when you buy at auction and the contract will determine the settlement period which is generally six weeks.
Generally, the auctioneer will walk you through this process and your agent will be close by to assist as well.
The signed and exchanged contracts will be sent to the solicitor for each party on the next business day and the solicitors will then work towards settlement.
After all that, we pop the bubbly for a celebratory drink!
We hope this guide has been helpful to you and our Team is always happy to answer any questions you may have about buying and selling at auction, just give us a call.